“This won’t fix the all industry’s structural problems but it’s a good first step. The next step is to draft wording for the regulations fin this code, in consultation with industry.”

Australian Dairy Farmers in a statement it aims strengthen farmers’ bargaining while respecting commercial realities and supporting innovation and market dynamics.

“A new code of conduct is an important step that will clarify and strengthen relationships between farmers and processors across all states of Australia,” ADF said.

Dairy Connect chief executive Shaughn Morgan said consultation over finalisation of the code would spur robust discussion between government, farmers and processors.

“Now is a good time for dairy industry stakeholders and government to begin finalising the contents for the mandatory code,” Mr Morgan said.

Mr Morgan was pleased that both major parties are focusing on structural failure in the dairy industry. He has also welcomed Labor agriculture spokesman Joel Fitzgibbon’s plans to implement a milk floor price.

“Dairy farms are diminishing, cows are being culled, fodder prices are increasing and power prices have skyrocketed,” Mr Morgan said.

“Joel Fitzgibbon has put forward a possible solution. That’s a good thing, in that a third party can look at the facts and that allows us in industry groups to look at the policies, comment on them and give advice to government.”

He opposes a milk floor price and yesterday said it could hurt the industry and highlighted claims that industry groups oppose the policy.

A Labor-controlled Senate Committee found in 2017 that a floor price or levy on fresh milk could distort the market and reduce farmer productivity; downgrade the competitiveness of Australia’s dairy export; decrease domestic consumption of fresh milk and; even impede Australia’s trade standing when advocating against international import tariffs on our dairy exports.

National Farmers' Federation chief executive Tony Mahar said the code would help address the power imbalance between processors, supermarkets and producers.

"The sector’s challenges are complex, but evening the playing field between small family dairy businesses and the might and power of processors and retailers, can only be positive," Mr Mahar said.

The mandatory code proposal released today also contains rules for transactions between processors and farmers:

Require parties to deal with each other fairly and in good faith having due regard to the other party’s legitimate business interests

Prevent unilateral changes to agreements

Require that annually on a set date processors publicly release a standard form agreement covering the terms of supply and a price (and if applicable a pricing mechanism for longer-term agreements) that covers the term of the agreement

Prevent retrospective price step downs

Prohibit prospective step downs unless in specific circumstances such as force majeure, or exceptional market circumstances or major changes in global market conditions